U.S. authorities charge three banks, eight individuals in futures 'spoofing' probe


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Date | 30-01-2018 - 04:13 PM Article Type | Stock Markets Region | World
Christmas decorations are seen at the building of Swiss bank UBS at the Paradeplatz square in Zurich, Switzerland, November 27, 2017. REUTERS/ Arnd Wiegmann

By Michelle Price

WASHINGTON (Reuters) - The U.S. Justice Department and the country’s derivatives regulator said on Monday they had filed civil and criminal charges against three European banks, which paid $46.6 million to settle the cases, and eight individuals for alleged manipulation in U.S. futures and commodities market.

 

UBS, Deutsche Bank and HSBC and former traders at the banks, as well as individuals at other firms, were charged following a large-scale multi-agency probe including the Commodity Futures Trading Commission (CFTC) into “spoofing” in metals and equities futures.

The case marks the first time the Justice Department and the CFTC had worked together, along with the Federal Bureau of Investigation, to bring both criminal and civil charges against multiple companies and individuals, and underlined the authorities’ increasing focus on holding individuals accountable for corporate wrongdoing.

Spoofing, which is a criminal offense under the 2010 Dodd- Frank financial reform law, involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution. By creating an illusion of demand, spoofers can influence prices to benefit their market positions.

Deutsche Bank and UBS have agreed to pay $30 million and $15 million respectively to settle the civil charges in the case, while HSBC will pay $1.6 million, the CFTC said.

All three banks received reduced penalties from the CFTC for providing significant assistance in the investigations, which relate to activity that dates back as far as 2008. UBS self-reported the alleged misconduct by its traders to the regulator, the CFTC said.

The imminent arrests and charges were reported earlier by Reuters.

A spokesman for UBS did not immediately provide comment.

 
A spokesman for HSBC said the bank was pleased to have resolved the matter.

A Deutsche Bank spokesman said the bank “has provided substantial and proactive cooperation with the government’s investigation and has enhanced controls and surveillance to help ensure that the underlying conduct does not occur in the future.”

”PERNICIOUS’

The alleged activity saw manipulation of a range of precious metals contracts, including in gold, silver, platinum or palladium futures, as well as in S&P E-mini futures.

UBS, Deutsche Bank and HSBC and former traders at the banks, as well as individuals at other firms, were charged following a large-scale multi-agency probe including the Commodity Futures Trading Commission (CFTC) into “spoofing” in metals and equities futures.

The case marks the first time the Justice Department and the CFTC had worked together, along with the Federal Bureau of Investigation, to bring both criminal and civil charges against multiple companies and individuals, and underlined the authorities’ increasing focus on holding individuals accountable for corporate wrongdoing.

Spoofing, which is a criminal offense under the 2010 Dodd- Frank financial reform law, involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution. By creating an illusion of demand, spoofers can influence prices to benefit their market positions.

Deutsche Bank and UBS have agreed to pay $30 million and $15 million respectively to settle the civil charges in the case, while HSBC will pay $1.6 million, the CFTC said.

All three banks received reduced penalties from the CFTC for providing significant assistance in the investigations, which relate to activity that dates back as far as 2008. UBS self-reported the alleged misconduct by its traders to the regulator, the CFTC said.

The imminent arrests and charges were reported earlier by Reuters.

A spokesman for UBS did not immediately provide comment.

 
A spokesman for HSBC said the bank was pleased to have resolved the matter.

A Deutsche Bank spokesman said the bank “has provided substantial and proactive cooperation with the government’s investigation and has enhanced controls and surveillance to help ensure that the underlying conduct does not occur in the future.”

”PERNICIOUS’

The alleged activity saw manipulation of a range of precious metals contracts, including in gold, silver, platinum or palladium futures, as well as in S&P E-mini futures.



Author: Heng V. Mony
Source: reuters.com
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